There's agreement across the political spectrum that Osborne's Budget was good politics but bad economics. This poses the question: how can a Budget which deprives millions of the worst off of hundreds of pounds a year possibly be "good politics."

Part of the answer, of course, is that the judge of what counts as "good politics" is the Westminster bubble. This bubble is isolated from economic truth - it has convinced itself that austerity is good economics - and has also succeed in marginalizing the low-paid, by pretending that "middle England" comprises people on handsome incomes.

In this sense, the media conforms to Adam Smith's claim, that we have a "disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition" (Theory of Moral Sentiments, I.III.28).

Given this deference and distorted reality, it is no wonder that Osborne should get so many plaudits*.

There is, though, another reason why the Budget is "good politics." It's because the Labour party ceased to be the party of workers and become a party for workers. Rather than be a vehicle whereby workers can advance their own interests**, Labour became a managerialist party, offering workers just so many crumbs from the table as capitalists could spare. This has allowed Osborne to pretend to steal Labour clothes by proposing a high minimum wage.

However, the managerialist takeover of Labour wasn't just bad politics in the sense of allowing the Tories to pose as the party for working people by lifting its policies. It's lousy economics too, in two senses.

One is that the best way to raise wages is to raise productivity.And a good way of doing this is to have greater worker control of firms and less top-down management: it was - remember - the latter that contributed to the collapse of banks.

The other is that policies that increase workers' bargaining power - such as fuller employment, stronger trades unions, a citizens' income that allows workers to reject bad jobs - are surely better ways of raising wages than a mandatory "living wage."

Now, I'll concede that my scepticism about the impact of minimum wages on employment might be excessive: we just don't know. What we do know, though, is that stronger bargaining power is surely a better way of raising pay without jeopardising jobs than an NMW. The former permits wages to rise where they are due to monopsony, but tolerates them where they are due to genuinely low marginal products. A legal NMW doesn't make this distinction and so is, as Martin Wolf says, a crude "leaden-footed regulatory intervention."

Sadly, because Labour has ceased to be a party of workers, and become just another Westminster-managerialist faction, it cannot make these points and cannot distinguish itself from the Tories.

The optimist in me can see glimpses of Labour grasping this fact - for example in Liz Kendall's call for worker representation on boards. Of course, that doesn't go far enough. But it is the direction Labour must move in.

* The BBC is complicit in this. If Osborne were to say the world if flat, Robert Peston would report that there's a debate about the shape of the world. I fear the fault here is less a personal one than an organizational one: the BBC's "due impartiality" requires it to be impartial between truth and falsehood.

** Labour has, of course, always been split along these lines, being a coalition of middle-class do-gooders and trades unionists. It is only recently, though, that the former became so dominant.